Contractors have to pay the "employer" half of FICA (social security and medicare) themselves, true. But there are things other than FICA that employers have t

Contractors have to pay the "employer" half of FICA (social security and medicare) themselves, true. But there are things other than FICA that employers have to pay for employees but not contractors. The most obvious one is unemployment insurance, both state and federal. There are likely others, in various location-dependent ways. Obviously contractors effectively self-insure for unemployment; this is a major reason why contractors are typically paid more on a nominal basis than employees are. In addition to that, there are compliance costs with employees (having to do tax withholding, pay reporting requirements to states and the IRS, etc) that are somewhat lower with contractors.